Who deserves credit for eight years of economic growth? It is usually presented as a multiple choice question: a) Bill Clinton, b) the Republican Congress, or c) Alan Greenspan. But these people can’t create real wealth; they are only capable of destroying it. The correct answer isn’t even among the choices.
There needs to be an additional choice labeled: d) the richest 400 people in America. It is they who are the driving force behind wealth creation, economic innovation, job and income growth, and the improvement of living standards generally. Those responsible for the current prosperity daily undertake activities that never make it into the headlines, but they make social and economic progress a reality for society as a whole as well as for themselves.
The new Forbes Magazine features profiles of many of these people. What amazing and inspiring stories! Their every decision affects the lives of thousands of people and the fate of billions of dollars. Everyone is jealous of their wealth, but who among us would be willing to undertake the risk or bear the enormous burdens they live with on a daily basis?
The total net worth of the 400 is $1.2 trillion, and the average net worth is $3 billion. Three-quarters of them are billionaires. The price of admission to the club is a cool $725 million. Nearly 1 in 8 of the members are new this year, having displaced 55 who fell from the list; 263 members are entirely self made, while only 77 inherited their wealth (the name Rockefeller doesn’t appear until #104). One quarter never graduated from college. One quarter live in California — as far from Washington, DC, as possible on the mainland.
The top five include no one from traditional industries. Three represent software (Bill Gates, Paul Allen, Larry Ellison), with one each from hardware (Gordon Moore) and securities (Warren Buffet). Many names you have never heard of are the secret behind the net getting faster, websites more navigable, and computers ever more sophisticated. The most lucrative investment in the last year appears to have been laying fiber optic cables and working to make them useful for internet services. Without them, you might not be reading this article right now.
Unlike the political class, which enjoys fawning interviews from the press and the cheers of servile supporters, the business class is abused and reviled by popular culture. Whereas the news media love nothing better than reprinting government press releases, the only time business leaders make it into the headlines is when they run afoul of government law. They also suffer bad press because they are mostly white men, the class that has been designated as evil oppressors.
It is commonly believed — even taught in business school — that these people are "taking" from the community. Hence, they have a moral obligation to "give back" in the form of philanthropy and other forms of "community service." The problem here is not charity itself. Rich or poor, capitalist or worker, giving is always a good idea (whether that should be done at the expense of stockholders is a different issue). Indeed, American businessmen are the most generous in the world and are the foundation of the half-trillion dollar non-profit sector in the US.
The trouble is the idea that charity should be a quid pro quo for making money. In truth, making money in a capitalist economy is identical to giving to the community. In a market economy, profits are an indication that one is serving one’s fellow man. The richer you become in business, the more you have contributed to the betterment of humanity — even if you are doing so for purely selfish reasons.
Even more than the individuals involved, the real miracle is what these 400 represent. Many of them are competitors with each other. Some of them are surely ruthless and greedy rogues; others, however, are pious family men. Some you would find intolerably arrogant; others you could trust with your life. Some are decidedly secular and others are profoundly religious.
Regardless, the market economy channels their rare impulses in socially productive ways, forcing them to turn their ambitious personalities toward the goal of serving others, and making them constantly accountable to consumers and investors. Their activities coordinate within a capitalist structure to improve every aspect of our lives, whether in education, entertainment, health care, communication, or a million and one other products and services. The market economy works to turn the love of money into the service of the consuming public, which is to say the community at large.
Not that most of the rich understand this. They are largely unconscious of their contribution to society, oddly ignorant of the larger picture, and loathe to praise the virtue of capitalism in public. They mostly accept the accusations made against them, by the media, the religious establishment, intellectuals of the left and the right, and government. Their profession has few defenders. When the attacks are so intense that they threaten their companies, they find themselves without the intellectual resources to explain their social merit.
This is less a problem in the US than in Europe. But only the US has billionaires such as Ted Turner who make their living off capitalist successes while using their profits to fund socialist activism. This is corporate suicide. Once the journalist John Stossel asked him whether it would be a better idea to invest a billion than to dump it on a bureaucracy like the United Nations. Turner walked off the set in outrage.
Lacking intellectual interest in market economics, some of them also lack principles in the way they conduct their affairs. For example, look at the pictures and profiles of #1 and #2, which clarify the real nature of the antitrust attack on Microsoft. Gates of Microsoft has $63 billion. Ellison of Oracle has $58 billion, and has been the leading cheerleader behind the attack on Gates, once even hiring people to dig through Microsoft’s garbage to find incriminating evidence. Worse, he’s got the government on his side. The bottom line is that Ellison can’t stand being #2 and is using the government to topple the guy on top!
Microsoft itself seemed to be on the verge of launching a principled defense of free enterprise, but then weighed in on behalf of an antitrust investigation of America Online for the success of its Instant Messaging software. This was a cheap assault on a competitor, a tactic no better than those used by Ellison against Gates. There’s nothing more tragic than seeing people who make their fortunes from the market economy turning to the levers of power to get their way.
But this kind of behavior is the exception, not the norm. The American business class, and in particular the richest 400, deserve our admiration and respect. If you doubt it, compare the magnificent achievements that led to their accumulation of $1.2 trillion with the deadweight loss and destruction of the $2 trillion the government will take in this year.