35% of the Forbes 400 list was born into a middle class or lower household.
22% inherited up to $1m.
12% inherited between $1m and $50m
7% inherited more than $50m.
21% inherited enough for that alone ensure they are on the Forbes 400 list.
The first bucket is clearly self made. The last two buckets are clearly not self made. Depending on your definition of "self made" that would leave somewhere between 35% and 69% of these people as self made.
Self Made is interesting. Does your family background have enough to cushion you if your startup fails.
It costs at least 20k a year to live (rent and food). You can gamble if you have 100k of funding, but that's setting you back a lot on things like 401ks and property ladders. If you have security from your family then shoot for the stars, great.
Same applies in many cases, it's not always as simple as how much wealth has been transferred from one generation to the next.
One example want to get a traditional 'good job' in London, lawyer, jouranalists, finance, etc, you need to take an unpaid internship and low paid start to your career for 5 years, all while maintaining London expenses. If you live with parents in commuterville you can do that, if you 're from Newcastle you're screwed. After 5 years of rent free living with parents you're £60k better off even with no cash injection, that's enough buy a house which means you're paying far less than renting, you start building your wealth.
But taht assumes you get the entry level jobs on merit, and not because of parental contacts, which happens a lot. Work experience at your Dad's squash partner's firm will get you rolling, yet wouldn't factor into your 'self made' list.
No man is an island, no man is self made. Those who 'succeed' do so through grit and luck and are often blind to their own advantages. Those that fail do so despite working hard.
The American dream of 'work hard and be rewarded' is bollocks. So much relies on advantages you don't even realise you've had.
> The American dream of 'work hard and be rewarded' is bollocks.
It is indeed bollocks, because it is "work smart and be rewarded". You have to work on the right things. Working hard at digging holes and filling them in again will get you nowhere. Looking around for an unfilled need, then starting a business to fill that need, will get you everywhere. Preparing yourself to become a valuable employee is another path.
You are of course right, but lets not conflate someone saving 5 figures by living with their parents for a few years with people who inherited 8+ figures which seems to be roughly a third of the Forbes 400 list. I don't know exactly where the appropriate place is to draw a line between these groups, but it is clear that these are vastly different scenarios.
>35% of the Forbes 400 list was born into a middle class or lower household.
Just to provide a little more clarity. Those numbers are from 2012. In 1997, 31% were in born "in the batters box"
However, there is a wide range of circumstances in the batter box. Defined as: "individuals and families whose parents did not have great wealth or own a business with more than a few employees."
Perhaps we differentiate on self-made, but some of those 35% I would not consider self-made either.
I think focusing on “self-made” is a red herring. No one is truly self-made. The point is, a good portion of the top wealthy people were not born into families of the top wealthy people, 1 generation ago.
It depends on definitions of "good portion" and "top wealthy people", but I don't think the numbers show the conclusions you are drawing from them.
The numbers vary by year as people enter or drop out of the Forbes list. However generally speaking you can probably divide that list into rough thirds. One third is the first generation experiencing any wealth. One third was born into enough wealth that they likely would never have to work a day in their life, except they decided to work and were able to compound that wealth into a obscene amount of money. The last third was already born with that extravagant wealth and may or may not have done anything to increase it.
Back to the topic at hand, a wealth tax would not have prevented those first two-thirds from earning their fortune. It would only negatively impact the starting position of that last third. The primary impact of a wealth tax would be to decrease generational billionaires which serves to increases the meritocracy.
The percent of totally self-made rich seems to be around 56%, and partially self-made is at around 30%. Note also that the proportion of self-made rich people is actually growing, even as the amount of wealth the rich has has decreased a bit[1] (methodology of the quoted study[2]). Also take a look at this intergenerational income mobility chart in figure 3 of a Pew study[3]; it says that people are
"likely" to stay poor, but that's actually less than half, so I would say it's more like "unlikely."
That Pew study you cited is from 2012. It's an interesting read, for sure, but do you have any more recent studies? It seems that some factors that dampen economic mobility have been worsening since then[1] and the wealth gap has grown significantly since then, especially between the top 5% and the rest of us[2]
IIRC, this common refrain is based on a study that required wealthy participants to self-report whether they made their money or inherited it.
Every "millionaire" seems to think they're self made, after all.