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Let's Stop Bashing Billionaires — They Are Making Our Lives Better

March 19, 2019 in Economics

By Chris Edwards

Chris Edwards

Are rich people idle “rentiers,” as economist Thomas
Piketty calls them, who inherit wealth and add no social value? In
supporting Sen. Bernie Sanders’ plan for higher estate taxes,
former Labor Secretary Robert Reich claimed
that “America is creating a new aristocracy of the
non-working super rich.” And in plugging Sen. Elizabeth Warren’s wealth
tax, Paul Krugman said
“we seem to be heading toward a
society dominated by vast, often inherited fortunes.”

In fact, today’s economy is dominated by entrepreneurial
innovation, which is generating rapid turnover in the ranks of the
wealthy. And even among the declining share of the rich who
inherited their wealth, many are impressive company builders or
philanthropists in their own right.

In the U.S. economy, wealth is dynamic, which is clear from the
Forbes annual list of the 400 richest Americans. Fully
43% of the people on the list in 2018 were not on it 10 years ago.
The newcomers are entrepreneurs driving economic growth. There is
Jensen Huang, co-founder of graphics chip maker Nvidia
NVDA, +3.66% and Shahid
Khan, who built automotive parts maker Flex-N-Gate. There are Brian
Acton and Jay Koum, co-founders of WhatsApp, which provides free
phone service globally for more than 1 billion users.

Reinhold Schmieding is on the 400 list. He founded Arthrex, a
surgical tools company that has developed thousands of products.
There is Robert Pera, founder of wireless equipment maker Ubiquiti
Networks, and Judy Faulkner, who founded medical records software
firm Epic Systems. Thai Lee is one of the many immigrant
entrepreneurs on the Forbes list. She built business IT provider
SHI International.

Today’s economy is
dominated by entrepreneurial innovation, which is generating rapid
turnover in the ranks of the wealthy.

These billionaires are the farthest thing from rentiers. They
are inventing new products and driving down prices of services that
we all use. They are making our lives better.

In a 2013 study, Steven Kaplan and Joshua Rauh explored
the backgrounds of Forbes 400 members over the years to see whether
wealth was self-made or inherited. They found that the share who
were self-made rose from 40% in 1982 to 69% by 2011. The study
found that fully 20% of people on the Forbes list grew up poor, as
billionaire Oprah Winfrey did. In 2018, Forbes produced a similar tally on the
rise of self-made billionaires
. The magazine found that
“the number of Forbes 400 members who have forged their own
path, using entrepreneurial capitalism as a means to attain a vast
fortune, has increased dramatically.”

Wealth is more dynamic in America than in Europe. <a target=_blank …read more

Source: OP-EDS

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