When Forbes magazine released its list of the richest “self-made” female entrepreneurs on Wednesday, Kylie Jenner was its cover star. At just 20, she is worth an estimated $900 million.
The use of “self-made” to describe Jenner’s vast wealth raised a lot of eyebrows. The magazine defined a self-made entrepreneur as someone who didn’t inherit a portion of their money and instead built up their own fortunes. Jenner’s riches come from her enormously successful Kylie Cosmetics business, which she started with $250,000 earned through modeling and endorsements.
But that rather overlooks the fact that Jenner comes from a family of huge wealth and privilege ― and an unflagging zeal for marketing their own. Twitter users hastened to point this out.
In America, there is a culture that celebrates other people’s enormous wealth. When the Forbes cover came out, Jenner’s fans on Twitter started a GoFundMe page to raise the $100 million she needs to cross the threshold into the billionaires club. In May, a crowdfunding campaign was launched to buy a new sofa for Elon Musk when he complained about having to sleep on his office floor.
But the way we talk and think about the extremely rich often ignores the systems that got them there, or what it means for the rest of society to have such concentrations of wealth.
Here we take a deeper look into a few of the key myths about the wealthy.
Anyone Can Get Rich If They Work Hard Enough
The American Dream says that anyone who works hard enough, regardless of the circumstances of their birth, can get rich. And some people do make the journey from rags ― or at least lower incomes ― to riches.
But the opportunity for others to join them seems to be shrinking. Social mobility has actually declined in the U.S. and today’s younger generation could end up poorer than their parents, according to research from the McKinsey Global Institute.
The great truth is this: Wealth tends to beget wealth. Rich parents can afford to send their kids to top-notch schools and colleges, leading to better opportunities, leading to the continuing build-up of wealth and privilege.
“It’s not just as if each generation you get some people who do really well and become rich, but then you reset,” said Richard Reeves, senior fellow in economic studies at the Brookings Institution, a public policy think tank. “As income inequality becomes wealth inequality, that’s much easier to pass on generation to generation.”
Even if Kylie Jenner has increased her fortune remarkably quickly, by virtue of the family she was born into she had a phenomenal head start.
Wealth inequality is a huge factor in the U.S. In 1983 upper-income families had 28 times the wealth of lower-income families; by 2016 that figure had increased to 75 times that of lower-income families, according to the Pew Research Center. The top 1 percent now controls 38.6 percent of the country’s wealth; the bottom 90 percent holds only 22.8 percent.
There’s a racial angle too ― in the U.S. and across the globe. In 2016, the median wealth of white American households was $171,000, while the median wealth of black American households was $17,100, according to Pew. On Forbes’ list of the world’s billionaires this year, just 11 of 2,043 are black.
And being male has long been a big advantage.
Wealth Trickles Down
One of the arguments for celebrating billionaires is that their bounty trickles down to the benefit of us all. These empire-builders supposedly employ armies of workers, pay loads of taxes and increase the economic pie for everyone. (In fact, Kylie Cosmetics has few employees.)
It’s the theory behind the Trump administration’s sweeping tax cuts for corporations and wealthy individuals. Gary Cohn, who was President Donald Trump’s chief economic adviser at the time the tax cuts were passed, told CNBC in November 2017 that they would lead to businesses coming back to the U.S.: “We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that’s good for the economy.”
Not everybody agrees. Sen. Bernie Sanders (I-Vt.) called trickle-down economics “a fraudulent theory,” adding, “I don’t think it’s ever worked. It’s a means by which the rich get richer.” He advocates for putting money directly into the hands of the workers, who will spend more and create jobs.
Investor Warren Buffett, who has a net worth of around $80 billion, has also criticized the concept of trickle-down economics. Talking to CNBC about the Forbes 400 list, which ranks the richest Americans, he noted that since 1982, the wealth of the top 400 had increased 29-fold, from $93 billion to $2.7 trillion. And yet, Buffett said, “During this period, the tsunami of wealth didn’t trickle down. It surged upward.”
Last year saw the biggest increase ever in the number of billionaires (as measured in U.S. dollars), according to a January report from Oxfam. Of the wealth created last year, the report said, 82 percent went to the top 1 percent of people around the world, while the bottom 50 percent “saw no increase at all.”
“All over the world, our economy of the 1 percent is built on the backs of low paid workers, often women, who are paid poverty wages and denied basic rights,” the Oxfam report says.
Recent analysis from the U.K.’s House of Commons suggests that the richest 1 percent could own two-thirds of the world’s wealth by 2030.
The Wealthy Are Great Philanthropists
Another argument in favor of billionaires is found in their charitable efforts. Buffett and Microsoft billionaire Bill Gates started the Giving Pledge in 2010, which encourages the wealthiest people around the world to commit to donating the majority of their money to philanthropic or charitable endeavors. Mark Zuckerberg and wife Priscilla Chan made a commitment to donate 99 percent of their Facebook shares ― worth $45 billion at the time ― toward philanthropic causes.
As admirable as that may be, progressive critics argue that this still leaves enormous influence over the distribution of society’s wealth to the whims of individuals with no democratic accountability.
“Big Philanthropy is definitionally a plutocratic voice in our democracy, an exercise of power by the wealthy that is unaccountable, non-transparent, donor-directed, perpetual, and tax-subsidized,” Rob Reich, professor of political science at Stanford, told The Atlantic.
The critics contend that greater income equality, backed by a strong, government-operated social security net, would serve the majority of the people much better.
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